Proposition 64 – The Last Marijuana Tax Standing For California


The California Legislature’s attempts to tax the medical marijuana industry have officially failed as of this month. But whether the state will legalize and tax the recreational marijuana market will be decided by voters this November.

The halted advancement of two medical marijuana tax bills was met with varying reactions by marijuana policy organizations.

“We opposed both bills because we thought it was really premature for the Legislature to get into taxation in advance of the election,” said Dale Gieringer, director of the California branch of the National Organization for the Reform of Marijuana Laws (NORML). “This issue is going to be on the ballot in the November election and I think we really have to wait for the dust to clear before we know what else should be done.”


The two medical marijuana tax bills introduced into the Legislature earlier this year never made it to a second floor vote, and instead died after being held in the committee review process.

First to go down in June was North Coast state Sen. Mike McGuire’s bill, SB 987, which would have created a 10 percent tax on medical cannabis dispensary sales. On Aug. 11, a separate bill, AB 2243, by North Coast state Assemblyman Jim Wood (D-Healdsburg) that would tax medical cannabis cultivation was held in the Senate Appropriations Committee, essentially rendering it dead.

“We don’t have any real policy reasons we can see at this point, but every year good things die in (the committee’s suspense file) and unfortunately this was one of them,” Wood’s spokesman Paul Ramey said of the bill’s failure to advance.

McGuire (D-Healdsburg) is a member of the Senate Appropriations Committee. He said he does not know why both his and Wood’s bills were not advanced through their respective committees, but added that the bills have faced opposition by three various factions of the Legislature: Republicans who oppose any tax measures, bipartisan opposition to cannabis taxes, and those who oppose medical marijuana in general due to its illegal status with the federal government.

McGuire defended both bills, calling them “equitable and fair.”

He further stated they would have provided millions of dollars in revenue to enforce against illegal marijuana grows that damage the environment; provide desperately-needed funding to address the $1 billion backlog in the state parks system; fund drug and alcohol treatment programs; fund public safety funds for local governments; and provide funds for the state.

“Ultimately, the decision now is in the hands of the voters,” he said.


A ballot measure that would legalize recreational marijuana use, known as Proposition 64, is set go before voters this November and will contain its own set of tax measures. The measure includes both a 15 percent sales tax on marijuana products as well as a flat tax on commercial marijuana cultivation.

If Proposition 64 is approved, the medical marijuana taxes proposed by Wood and McGuire would have been removed.

Proposition 64 was also brought up by the Assembly Revenue and Taxation Committee in its review of McGuire’s bill and may have contributed to its 5-4 vote against the bill.

“All of this, however, raises the question of whether it might be appropriate to defer the establishment of a tax regime until after the voters have had a chance to decide whether to legalize recreational marijuana,” the committee’s June 20 analysis states.

Should voters choose not to pass Proposition 64, McGuire said he and Wood would work together to reintroduce a medical marijuana tax proposal.

Proposition 64’s tax systems mirror the original tax proposals in Wood and McGuire’s bills. However, the legislators had since modified their bills throughout the year to address concerns raised by the marijuana industry.

Unlike the flat cultivation tax in Proposition 64, Wood’s bill would have created a tiered tax structure in which larger growers would be taxed at higher rates.

“I don’t know how much wiggle room there will be to do that if the initiative would pass,” Ramey said.

While the California Grower’s Association was not supportive of McGuire’s bill, it did support Wood’s bill specifically because of the tiered tax rate. “(Proposition 64) was not written in such a way that it was really considerate and mindful of small business interests,” California Grower’s Association Executive Director Hezekiah Allen said. “When we ask for specific policy like a tax incentive for small businesses, those are absent in Prop. 64.”

McGuire said his bill exempted impoverished and severely ill medical marijuana users from having to pay any sales tax on medical marijuana purchases.

“Under (Proposition 64), if you are sick and vulnerable, you still have to pay the local sales tax,” he said. “Our bill said if you are sick or vulnerable or economically challenged, you don’t pay a dime in taxes.”

However, other entities are more supportive of taxing the recreational market over the medicinal industry.


The topic of whether to tax medical marijuana has become a controversial topic within Humboldt County’s cannabis community, and the climate is no different at the state level.

The Marijuana Policy Project’s State Policies Director Karen O’Keefe said the national organization was opposed to medical marijuana tax bills, but supports a tax on recreational use.

“We’re already concerned that medical cannabis in California is subject to sales taxes and local taxes,” she said. “There should not be an additional tax levied on the backs of patients.”

While he did support the tiered tax structure of Wood’s bill, Gieringer of California NORML said his organization opposes any taxation of medical cannabis. He said that too much taxation would result in patients relying on the black market to buy their medicine.

“The tax on medicine was excessive and uncalled for given that they would stimulate the illegal adult use market,” he said. “… If (Proposition 64) fails in November, we’re happy to reconsider this whole issue next year. But to try to do something now is premature.”

News Moderator: Katelyn Baker
Full Article: Proposition 64 – The Last Marijuana Tax Standing For California
Author: Will Houstan
Contact: Times Standard
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